Opinion
NOT TO BE PUBLISHED
San Mateo County Super. Ct. No. F 072352
Marchiano, P.J.
Jerine Stuart (Jerine) and Richard Stuart (Richard) separated in 2002 after a lengthy marriage. After dissolution proceedings, the trial court issued a statement of decision and a judgment of dissolution, in which it divided community assets and denied Jerine’s request for permanent spousal support. Jerine appeals the denial of spousal support. We affirm.
We refer to the parties by their first names for purposes of clarity and not out of disrespect. (Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1136, fn. 1.)
I. FACTUAL AND PROCEDURAL BACKGROUND
Our discussion is based on the facts set forth in the trial court’s statement of decision. Jerine states that she does not challenge the trial court’s factual findings.
A. The Division of Community Property
The Stuarts’ largest community asset was 52.22 percent of the stock of ARES Corporation (ARES), a highly successful privately held corporation. ARES is an engineering services and risk management firm serving governmental and commercial customers. Richard is one of the founders of ARES. He serves as ARES’s Chairman of the Board, Chief Executive Officer, President, and Chief Financial Officer, positions he has held since the 1992 founding of ARES.
A significant portion of ARES’s business requires high level government security clearances. Because ARES is privately held, the holders of a specified majority of total company shares must have the required government security clearances in order for ARES to perform certain types of government contracts. Richard has the requisite security clearances.
The trial court found that the community property value of the Stuarts’ ownership interest in ARES at the time of the trial in 2005 was $17,796,024, with a rounded share value of $27.8063 per share. The trial court awarded all of the community’s stock in ARES to Richard. The court concluded this allocation was appropriate in light of Richard’s extensive involvement in managing ARES and his security clearances. The court found that an in kind division of the stock would likely lead to significant conflict between Richard and Jerine (who would be the two largest minority shareholders) that would have a detrimental impact on the economic viability of ARES, and would jeopardize the company’s ability to procure and retain contracts that require high level security clearances.
The court awarded other community assets, including two residences, to Jerine. To equalize the division of community property, the court ordered Richard to pay $7,582,417 to Jerine. Of this amount, Richard had already paid $100,000, and the court ordered him to pay an additional front-end payment of $482,417, and to provide Jerine a promissory note (secured by a portion of the ARES stock) for the $7,000,000 balance. The note requires Richard to make annual principal payments of $250,000 for four years, and a balloon payment of $6,000,000 on January 1, 2011. The note also requires Richard to make monthly interest payments at seven percent simple interest per year.
B. Spousal Support
In determining whether to award spousal support to Jerine, the trial court considered the parties’ marital standard of living, their earning capacities, Jerine’s present and anticipated living expenses, and the assets and income available to each party, as well as other factors. The court noted that, after division of the community assets, Jerine would have an estate of more than $10,000,000, including the community property equalizing payment of over $7,500,000. The court found that the funds from this equalizing payment would generate interest income or other investment income for Jerine. The court stated that, as an example of such income, the seven percent simple interest pre-tax rate of return on the $7,000,000 principal balance of the promissory note would provide Jerine with $490,000 per year (or $40,833 per month) in taxable interest income; assuming a 30 percent tax rate, Jerine would receive, from these interest payments alone, over $28,500 per month in net disposable income. Because Jerine would be able to generate this amount of income from her assets without impairing principal, the court concluded that Jerine’s income “should meet/exceed her reasonable needs as measured by the marital standard of living.” Accordingly, the court found that Richard has no present spousal support obligation to Jerine.
The court further stated that it anticipated that, as Richard pays down the promissory note principal obligation, Jerine will be able to invest the principal she receives “to obtain an investment rate of return which is at least equivalent to a well secured 5% pre tax investment rate of return.” The court found that this was “a reasonably conservative investment rate of return which should not pose any significant risk of impairment of [Jerine’s] investment capital.”
As to Richard’s ability to pay spousal support, the court concluded that, because Jerine’s assets and income would be sufficient to provide for her proper support, an analysis of Richard’s post-separation income and earnings would be “essentially irrelevant.” However, the court also stated its view that, in light of the monthly interest payments and annual principal payments Richard was obligated to pay in connection with the promissory note, Richard would not be able to pay spousal support “while the promissory note remains unpaid.”
After considering these and other factors, the court ruled that Richard does not owe an ongoing spousal support obligation to Jerine after October 1, 2005 (which was the first date on which Richard owed Jerine retroactive interest on the community property equalizing payment). Because the parties’ marriage was of long duration, the court reserved jurisdiction over the issue of spousal support. The court stated, however, that absent extraordinary circumstances, it did not expect Jerine would have a basis for seeking a review of spousal support until after Richard had paid off the promissory note obligation in 2011, because the income Jerine will receive in the interim is in excess of the marital standard of living and sufficiently provides for Jerine’s needs. The court’s jurisdiction over spousal support will terminate upon the death of either party, Jerine’s remarriage, or further order of the court.
The trial court entered judgment on May 1, 2007. Jerine timely appealed.
In addition to appealing the judgment (No. A118430), Jerine appealed the trial court’s subsequent order regarding attorney fees (No. A120610). Richard cross-appealed in both matters. Pursuant to the parties’ stipulation, this court consolidated the two appeals for all purposes. In her opening brief, Jerine states she will not pursue her appeal of the attorney fees order. Richard has not raised any claims of error as to the judgment or the attorney fees order. Accordingly, the only issues before this court are Jerine’s challenges to the judgment.
II. DISCUSSION
A. Statutory Framework and Standard of Review
In determining whether to award permanent spousal support, a trial court must consider the factors identified in Family Code section 4320. (§ 4320; In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 302 & fn. 20 (Cheriton).) These factors include the ability of the supporting party to pay; the needs of each party based on the marital standard of living; the obligations and assets of each party; the balance of hardships to each party; and the goal that the supported party be self-supporting within a reasonable period of time. (§ 4320, subds. (c)-(e), (k)-(1).) In addition, sections 4321 and 4322 provide for denial of support to a spouse whose assets are sufficient to provide for his or her proper support. (§§ 4321, subd. (a), 4322.) Section 4321, subdivision (a) is discretionary and provides that the court “may deny support to a party out of the separate property of the other party” if “[t]he party [requesting support] has separate property, or is earning the party’s own livelihood, or there is community property or quasi-community property sufficient to give the party proper support.” (§ 4321, subd. (a).) Section 4322 is mandatory and specifies that, “where there are no children, and a party has or acquires a separate estate, including income from employment, sufficient for the party’s proper support, no support shall be ordered or continued against the other party.” (§ 4322.)
All statutory references are to the Family Code.
Once the trial court considers and applies the factors listed in section 4320, it has broad discretion as to whether to award spousal support, and we review its decision for abuse of discretion. (In re Marriage of Ackerman (2006) 146 Cal.App.4th 191, 197 (Ackerman); Cheriton, supra, 92 Cal.App.4th at pp. 283, 304; In re Marriage of Martin (1991) 229 Cal.App.3d 1196, 1200 (Martin).) In particular, the court has discretion as to how much weight to give each statutory factor. (Cheriton, supra, 92 Cal.App.4th at pp. 304, 308.) The court’s discretion is not unlimited: “ ‘In exercising its discretion the trial court must follow established legal principles and base its findings on substantial evidence.’ ” (See In re Marriage of West (2007) 152 Cal.App.4th 240, 246 (West) [modification of support order]; accord Cheriton, supra, 92 Cal.App.4th at p. 304 [court must exercise its discretion along legal lines and consider the relevant circumstances of the parties].)
Jerine argues the standard of review is de novo, relying on In re Marriage of Terry (2000) 80 Cal.App.4th 921 (Terry). In Terry, the court held that, when the underlying facts are undisputed, the question of whether a supported spouse’s “separate estate” is “sufficient for [his or her] proper support” under section 4322 is a mixed question of fact and law that is reviewed de novo. (Terry, supra, 80 Cal.App.4th at pp. 928-929.) However, Jerine’s argument on appeal is somewhat different from the “sufficiency” question raised in Terry. Jerine does not focus principally on the issue of whether certain assets or a certain amount of income (the $28,500 in net monthly income from the interest payments on the promissory note) will be “sufficient” to provide for her proper support. Instead, she claims the trial court should not have considered the interest payments at all in determining the amount of her net monthly income; she asserts it was legal error, or unfair, to do so. We review these arguments under the abuse of discretion standard, which, as noted above, requires the trial court to follow established legal principles. (See West, supra, 152 Cal.App.4th at p. 246; Cheriton, supra, 92 Cal.App.4th at p. 304.) To the extent Jerine’s contentions raise questions of law, including issues of statutory interpretation, we review such questions de novo. (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 432.)
B. Interest Payments on the Promissory Note
Jerine’s principal argument is that the trial court should not have treated the interest payments on the promissory note as income that she can use to provide for her support under sections 4320-4322. We disagree.
The trial court treated as income only the interest payments, not the principal payments, Jerine receives in connection with the promissory note.
As noted above, in determining whether to award spousal support, the trial court must consider the assets and obligations of both spouses (§ 4320, subd. (e)), and whether the supported spouse has an estate sufficient to provide for his or her own proper support (§§ 4321, subd. (a), 4322). For purposes of this determination, the supported spouse’s estate includes assets the spouse received as a result of the allocation of former community property, and the reasonable income potential from such assets. (§ 4321, subd. (a); Terry, supra, 80 Cal.App.4th at pp. 929-931; Martin, supra, 229 Cal.App.3d at p. 1201; In re Marriage of Kennedy (1987) 193 Cal.App.3d 1633, 1640 & fn. 4 (Kennedy).) The court may consider the supported spouse’s investment income. (In re Marriage of Schmir (2005) 134 Cal.App.4th 43, 52-53 (Schmir).) The court may also impute a reasonable rate of return on the supported spouse’s assets. (Ackerman, supra, 146 Cal.App.4th at pp. 210-212; see Terry, supra, 80 Cal.App.4th at p. 930.) Under these principles, if Richard had been able to pay Jerine the entire $7.5 million community property equalizing payment at once, the trial court could have considered actual or imputed interest income from those funds in determining whether Jerine was able to provide for her own support. Moreover, if Jerine were receiving interest or investment income from any other source, the trial court could have considered that income. Similarly, the interest payments Jerine receives from Richard are income that she may use to provide for her support.
The trial court treated its spousal support decision as a discretionary one based on sections 4320 and 4321, and analyzed the factors listed in those statutes. The court did not mention or rely on section 4322, which requires denial of support when there are no children and the spouse’s estate is sufficient to provide proper support. (§ 4322; see Terry, supra, 80 Cal.App.4th at p. 928.) However, both parties cite section 4322 in their briefs and appear to assume that it is potentially applicable here. Regardless of which statute applies, the court was required to consider whether Jerine’s assets and income were sufficient to provide for her proper support. (§§ 4321, subd. (a), 4322.)
Jerine contends, however, that the trial court should not have treated the interest payments as income because they came from Richard in connection with the promissory note established to equalize the division of community property. Specifically, Jerine argues that these interest payments are not investment income but are instead part of the community asset itself. Based on this claim, Jerine argues that the trial court, by classifying the interest payments as income, unfairly penalized Jerine for receiving her share of community property; gave Richard a windfall; and effectively required Jerine to invest her community property in “an impermissible court-imposed investment plan,” i.e., the promissory note paying seven percent interest. However, the authorities Jerine cites do not establish that the trial court committed legal error or abused its discretion by treating the interest payments as income.
1. Classification of the Interest Payments as Income.
First, in making her foundational argument that the interest payments are not income but are part of the community asset, Jerine relies on this court’s decision in West. Jerine argues that, in West, this court “implicitly recognized” that “interest earned from the delayed receipt of community property funds is not income; it is the price (i.e., present value) of the community asset.” West is distinguishable and does not establish a rule that interest payments on a promissory note given to equalize the distribution of community property are not income.
In West, the divorcing spouses entered into a marital settlement agreement that provided for the sale of a community business and the division of the proceeds; each party received a cash payment and a promissory note providing for payments of principal and interest over six years. (West, supra, 152 Cal.App.4th at pp. 242-243.) The parties also agreed that, irrespective of any other amounts received by the wife, the husband would pay support. (Id. at p. 243.) When the promissory notes were paid off, the wife did not seek an increase in spousal support. (Id. at p. 244.) Two years later, the husband moved for a reduction in spousal support; the trial court granted the motion, relying in part on the wife’s receipt of a portion of the proceeds from the sale of the community business, which the court apparently believed the wife should have saved and invested to provide for her own support. (Id. at pp. 244-246, 249-251.)
We reversed, finding that the factors relied on by the trial court did not justify a reduction of support. (West, supra, 152 Cal.App.4th at pp. 249-252.) As to the funds the wife received from the sale of the community business, we noted that the wife had stopped receiving any income from the sale and that the loss of this income could not justify a reduction in support. (Id. at p. 250.) We also noted that the trial court may have been imputing to the wife the interest income it believed she could have received if she had preserved the principal. (Ibid.) We found that this was inappropriate because the wife already was in effect imputing that income to herself by not seeking an increase in support after the promissory note was paid off. (Id. at pp. 250-251.) We then stated that “[t]he promissory note and the payments thereon were [the wife’s] fair share of the community property, and the marital settlement agreement and subsequent orders gave [the wife] spousal support in addition to that share.” (Id. at p. 250.) We concluded that the wife’s receipt of a portion of the proceeds from the sale of the community business, and her failure to invest the principal, did not provide a basis for reducing support. (Id. at pp. 250-251.) Finally, we noted that it would be unfair to penalize the wife for failing to invest the principal without having first warned her that she would be expected to invest it. (Id. at p. 251, citing In re Marriage of Gavron (1988) 203 Cal.App.3d 705, 711-712.)
Jerine relies on our general statement in West that the “promissory note and the payments thereon” received by the wife in that case (which included both principal and interest) were her “fair share of the community property[.]” (Id. at p. 250.) However, we did not hold in West that the interest portion of the payments on a promissory note established to distribute or equalize community property can never be considered in making the overall assessment of whether a supported spouse is able to provide for his or her own proper support. That issue was not raised in West. Instead, as noted above, the promissory note in West had been paid off, and the payments of both principal and interest had ceased. (Id. at p. 244.) Moreover, the parties in West, unlike the parties here, had expressly agreed that the wife would receive the promissory note payments and spousal support. (Id. at pp. 243, 250.) In that context, we held that neither the wife’s decrease in income when the note was paid off, nor the fact that she had received a portion of the community property assets, nor her failure to invest the principal (without having been warned that she was expected to do so), provided a basis for reducing support. (Id. at pp. 250-251.)
In addition to relying on West, Jerine argues generally that the interest on the promissory note is not investment income and instead is compensation to Jerine for the delayed receipt of the principal, which would have been more valuable to her if she had received it immediately. It is true that if the principal had been paid at once, Jerine could have invested it and earned interest or other investment income. However, as noted above, such income could properly have been considered in assessing whether Jerine was able to provide for her own proper support. (§ 4321, subd. (a); Schmir, supra, 134 Cal.App.4th at pp. 52-53; Terry, supra, 80 Cal.App.4th at pp. 929-931.) Jerine has offered no persuasive reason why the interest payments she received from Richard in place of the interest she could have earned herself should not similarly be considered in assessing her ability to provide for her own support.
2. The Trial Court Did Not Penalize Jerine.
Building on her argument that the interest payments are part of her share of the community assets, Jerine argues that the trial court’s “mischaracterization” of those payments as income had the effect of “punish[ing]” her for receiving her share of community property. This argument fails. First, as discussed in part II.B.1 above, Jerine’s premise is incorrect—the trial court properly treated the interest payments as income. Second, in any event, the cases Jerine cites in support of her argument—In re Marriage of Rabkin (1986) 179 Cal.App.3d 1071 (Rabkin); Martin; and Cheriton—are distinguishable and do not establish that the trial court’s classification of the interest as income penalized Jerine.
First, in Rabkin, the parties entered into a marital settlement agreement that provided (1) the wife would receive her share of the community property and spousal support, and (2) the sale of the marital residence could not be considered a change of circumstance justifying a modification of spousal support. (Rabkin, supra, 179 Cal.App.3d at pp. 1074-1076, 1078-1081.) However, the trial court later reduced spousal support, basing its decision in part on the sale of the marital residence and the wife’s resulting receipt of monthly mortgage payments from the purchaser. (Id. at pp. 1078-1079, 1081.) The Court of Appeal reversed. (Id. at pp. 1081-1082.) Noting that the parties’ agreement provided the wife would receive both her share of community property and spousal support, the court stated: “It makes no more sense to reduce wife’s spousal support because she received her rightful share of the community property than it would to increase wife’s spousal support because husband received his rightful share of the community property.” (Id. at p. 1081.) The court noted that, in any event, because the parties’ agreement expressly provided that the sale of the residence would not constitute a change in circumstances justifying a reduction in support, the trial court’s reliance on the sale in ordering a reduction was improper. (Id. at pp. 1080-1081.) Here, the parties did not agree that Jerine would receive both the interest payments on the promissory note and spousal support. And the trial court did not penalize Jerine for receiving her share of the community property or require her to impair the principal she receives. The court simply recognized that the interest payments Jerine receives in connection with the promissory note, like other income she may derive from the principal, will be available to Jerine for use in meeting her reasonable support needs.
Second, in Martin, the parties agreed to a property division that allowed the husband to retain community assets and buy out the wife’s interest. (Martin, supra, 229 Cal.App.3d at p. 1198.) To make this payment to the wife, the husband had to borrow money and make monthly payments on the debt. (Id. at p. 1199.) The trial court, after considering these facts and other relevant factors, ordered the husband to pay spousal support. (Ibid.) The Court of Appeal affirmed, holding that the husband could not “finance a ‘buy-out’ of community property and then successfully claim inability to pay spousal support.” (Id. at pp. 1198, 1201.) Here, the trial court did not base its denial of spousal support on Richard’s inability to pay; instead, it concluded that, because Jerine’s assets and income were sufficient to provide for her proper support, Richard’s income was “essentially irrelevant” (although the court then noted that, given Richard’s obligations under the promissory note, he would not likely be able to pay spousal support until after the note was paid off). Moreover, the Court of Appeal in Martin did not hold that every spouse financing a “buy-out” of community property must also pay spousal support, regardless of the circumstances; the court merely held that the trial court in that case did not abuse its discretion in awarding support. (Id. at pp. 1200-1201.) Finally, the Martin court noted that the community property equalizing payment became the wife’s separate property, and stated that the trial court correctly considered this property in making its decision on spousal support. (Id. at p. 1201.) Similarly, here, the trial court, pursuant to sections 4320–4322, properly considered the assets Jerine has received and will receive as part of the community property division, and the actual and likely income from those assets, in making its decision on spousal support. (See §§ 4320, subd. (e), 4321, subd. (a), 4322.)
Finally, in Cheriton, the Court of Appeal held that the trial court abused its discretion by including in a spousal support award an automatic “step-down” provision that reduced the wife’s support by $1 for every $2 she received in “gross income” over $50,000 per year. (Cheriton, supra, 92 Cal.App.4th at pp. 309-310.) After noting that courts have upheld step-down provisions that reduce spousal support based on the supported spouse’s increased earnings, the Cheriton court held that the step-down provision based on “gross income” was overbroad because it “includes not only [the wife’s] actual and imputed earnings, but also the gross proceeds from any sale of options, stocks, or other assets.” (Id. at p. 309.) Because the provision could cause a reduction in support based on the wife’s receipt of funds she received from the sale of her assets, including assets she received as part of the division of community property, a “foreseeable consequence” of the provision was to “punish [the wife] for transforming assets she received in the property division into cash.” (Id. at p. 310.) Here, by contrast, the trial court only considered as income the interest on the promissory note; the court did not treat proceeds from the sale of principal assets as income justifying a denial of spousal support.
3. The Alleged “Windfall” to Richard
Jerine argues that the trial court’s classification of the interest payments as income resulted in a “windfall” for Richard and an inequitable distribution of the community assets. This contention is based in large part on Jerine’s assertion that the value of Richard’s ARES stock will grow at 25 percent per year from 2007 until 2010, thus allegedly leaving Richard with more wealth than Jerine. However, section 2552 establishes that the time of trial generally is the appropriate date for valuing community assets for purposes of division. (§ 2552, subd. (a).) The trial in this case took place in August and September of 2005, and Jerine requested that the ARES stock be valued as of that date. The trial court agreed, rejecting Richard’s request for an earlier valuation date that would have resulted in a lower valuation. Jerine does not challenge the trial court’s determination as to the value of the stock in 2005, and she concedes that the trial court divided the community property equally. The fact that the ARES stock may appreciate in the future provides no basis for reversing the trial court’s decision.
4. The Validity of the Promissory Note
Jerine concedes that the trial court had discretion to award Richard the ARES stock and to order the use of a promissory note to equalize the division of community property. (E.g., In re Marriage of Bergman (1985) 168 Cal.App.3d 742, 746-747, 761-762(Bergman) [approving use of promissory notes to equalize division of community property].) Nevertheless, she claims that because the trial court classified the interest payments as income, the promissory note became, in effect, “an impermissible court-imposed investment plan,” because she did not have the opportunity to invest or use the principal in other ways. Again, however, the authorities Jerine cites—in this instance, Kennedy and Martin—do not support her position.
In Kennedy, the trial court awarded spousal support of $2,500 per month, which would terminate when the community residences were sold and the income from the wife’s investments equaled $2,500 per month; however, the judgment did not expressly require the wife to make any investments. (Kennedy, supra, 193 Cal.App.3d at pp. 1637, 1639.) When the wife received her share of the proceeds from the sale of the principal community residence, she used a portion of the funds to purchase a new home and invested the remainder in a stock portfolio that was designed to maximize growth and did not pay any dividends or monthly income. (Ibid.) The trial court later reduced spousal support after finding that the wife’s share of the proceeds from the sale of the residence could have been invested to generate $2,080 in monthly income. (Id. at pp. 1637-1638.)
The Court of Appeal in Kennedy interpreted the trial court’s original judgment setting spousal support as providing that, if the wife invested the proceeds of the sale, the husband’s support obligation would end when the investments in fact produced a $2,500-per-month income; the Court of Appeal concluded that the original order did not require the wife to make investments. (Kennedy, supra, 193 Cal.App.3d at pp. 1639-1640.) Because the trial court’s subsequent order reducing support was based on the erroneous assumption that the wife was required to make investments, the Court of Appeal reversed the order reducing support. (Id. at p. 1640.) The Court of Appeal stated that it was unnecessary to decide “whether [a trial court] can order a spouse to invest his or her proceeds from the division of the community in a particular manner,” but suggested that a trial court cannot make such an order; the Kennedy court later stated that the wife in that case “was not obligated to invest her separate assets in a certain manner.” (Id. at p. 1640 & fn. 3.) Finally, the court found that the trial court abused its discretion by (1) finding that the wife should have invested her entire share of the sale proceeds (which contradicted the trial court’s own prior finding that the wife acted reasonably in using a portion of the funds to purchase a new home), and (2) assuming a high rate of return (10 percent) on those funds. (Id. at p. 1641.) The Kennedy court emphasized, however, that a trial court, in determining whether to award spousal support, may consider the assets of the supported spouse and “the manner in which they are utilized”; the court also may consider the actual income earned from the supported spouse’s property. (Id. at pp. 1640-1641.) Similarly, in Martin, the Court of Appeal, citing Kennedy, stated that, while a supported spouse is not obligated to invest his or her separate assets in a particular manner, the trial court may “factor[] this separate property estate into the spousal support equation.” (Martin, supra, 229 Cal.App.3d at p. 1201, citing Kennedy, supra, 193 Cal.App.3d at pp. 1640-1641.)
These statements in Kennedy and Martin do not provide a basis for reversing the trial court’s ruling here. The trial court did not order Jerine to invest her share of the community assets in a particular manner once she receives them. The court exercised its discretion to order the use of a promissory note to equalize the community property division (see Bergman, supra, 168 Cal.App.3d at pp. 746-747, 761-762), and then properly considered Jerine’s actual interest income from the note in determining the spousal support issue. (See Schmir, supra, 134 Cal.App.4th at pp. 52-53; Kennedy, supra, 193 Cal.App.3d at pp. 1640-1641.) The fact that the payments the trial court considered reflected interest on the promissory note rather than on some other asset or investment did not transform the permissible promissory note into an impermissible court-ordered investment plan.
C. Estimated Future Rate of Return
As noted above, the trial court stated that it anticipated that, as Richard pays Jerine the principal of the promissory note obligation, Jerine will be able to invest the principal to receive a five percent rate of return. The court found that this was a reasonably conservative investment rate of return that would not pose a significant risk of impairment of Jerine’s investment capital. Jerine challenges this portion of the trial court’s order, claiming that there was no evidence to support the court’s five percent estimate because she had not yet had the opportunity to manage the principal or develop an investment history. We disagree.
As noted above, in determining whether to award spousal support, a trial court may impute a reasonable rate of return to the assets of the spouse requesting support, including assets received in the division of community property. (Ackerman, supra, 146 Cal.App.4th at pp. 210-212; Kennedy, supra, 193 Cal.App.3d at p. 1641 [court “overstepped its bounds by using a 10 percent rate of return” but would have had discretion to “consider the rate of return earned on the balance of the property division after purchase of [a] home”]; see also Terry, supra, 80 Cal.App.4th at p. 930 [where reasonableness of supported spouse’s investment strategy is challenged, trial court should consider “actual and reasonable income potential from investment assets”].)
Jerine contends that the trial court’s estimate of a five percent rate of return was not supported by evidence of her prior investments. More broadly, relying on In re Marriage of McNaughton (1983) 145 Cal.App.3d 845 (McNaughton), Jerine appears to argue that it would have been inappropriate for the trial court to use any estimated rate of return because she had not yet had the opportunity to manage her principal assets or show the rates of return her investments could produce. In McNaughton, the trial court awarded support, and the husband appealed, claiming that the wife’s $3 million estate would, as a matter of law, generate sufficient income to provide for her support. (McNaughton, supra, 145 Cal.App.3d at pp. 851-852.) The Court of Appeal rejected the husband’s argument and stated that, because the community assets and obligations had just been divided and the wife had not yet had the opportunity to manage her property, the “ultimate income available to her is pure speculation.” (Id. at p. 852.) Accordingly, the trial court in McNaughton had not abused its discretion in finding, under the circumstances at the time it made its order, that the wife needed additional support; the Court of Appeal emphasized that the award could be modified in the future if appropriate. (Id. at pp. 852-853.)
However, in concluding that the trial court in that case did not abuse its discretion in awarding support, the McNaughton court did not hold that a trial court must always award support until after the supported spouse has established and implemented an investment strategy, nor did the court hold that a trial court may not impute a reasonable expected rate of return to the supported spouse’s assets. Jerine has not shown that the trial court here abused its discretion by imputing investment income to the substantial assets she receives as Richard pays off the principal portion of the promissory note obligation. (See Ackerman, supra, 146 Cal.App.4th at pp. 210-212; Kennedy, supra, 193 Cal.App.3d at p. 1641; see also Terry, supra, 80 Cal.App.4th at p. 930.) Nor has Jerine shown that, under the circumstances existing at the time the trial court made its order, the court abused its discretion in estimating that the principal will yield a five percent rate of return. (See McNaughton, supra, 145 Cal.App.3d at pp. 852-853 [whether trial court abused its discretion is determined in light of circumstances at time of decision].)
To the extent Jerine contends that the actual rate of return generated by her principal assets in the future may fall short of the five percent anticipated by the trial court, we note that the trial court reserved jurisdiction over the spousal support issue. If circumstances warrant in the future, Jerine may seek a modification of the court’s order denying support. (See West, supra, 152 Cal.App.4th at p. 248 [wife could seek increased support in future based on “unrealized expectation” as to amount of her future earnings]; McNaughton, supra, 145 Cal.App.3d at pp. 852-853 [husband could seek modification of support award after wife had opportunity to invest assets].)
As noted above, the trial court stated that it did not expect Jerine would have a basis for seeking review of spousal support until after Richard pays off the promissory note in 2011, because the interest payments she is receiving in the interim are sufficient to provide for her support.
III. DISPOSITION
The judgment of dissolution and the subsequent attorney fees order are affirmed. Richard shall recover his costs on appeal.
We concur: Margulies, J., Graham, J.
Retired judge of the Superior Court of Marin County assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.